For Colorado pot ads, social media just saying no

Google, Twitter Facebook reject them in Colorado

Updated 9:50 am, Friday, June 20, 2014

Employees Chris Broussard (left) and David Marlow work at a Denver marijuana retail store.

Employees Chris Broussard (left) and David Marlow work at a Denver marijuana retail store.

Photo: Brennan Linsley, Associated Press

For Colorado pot ads, social media just saying no

1 / 1

Back to Gallery

With recreational marijuana legal in Colorado, the pioneers in the burgeoning market are struggling with an odd business scenario: It's easier to buy cannabis than it is to buy an online advertisement for it.

"It's really holding back the industry because it is preventing us from targeting our potential customers," said Isaac Dietrich, the CEO of MassRoots, a year-old mobile social network positioning itself as the Instagram of weed. Dietrich hopes to take advantage of the online ad void by selling ad space on MassRoots, where users can chat up their favorite strains of pot and share photos they otherwise might not be comfortable posting if they count family and employers among their Facebook friends.

As the heavy hitters in the cannabis industry gather in Colorado next week for some of its largest-ever business-related conferences, Silicon Valley's cold shoulder is one of the industry's nagging concerns.

Study: 4,000-Year-Old Decapitated Toads Found In Jerusalem Likely Part Of A ‘Burial Kit’GeoBeats

According to its advertising guidelines, Facebook will not allow ads that "promote or facilitate the sale or consumption of illegal or recreational drugs, tobacco products, or drug or tobacco paraphernalia."

Twitter's ad policy is more specific, banning ads including "all accessories related to drug use, such as bongs, pipes, vaporizers and grinders ... (and) products and services furthering access to drugs, such as dispensary directories."

Google "doesn't allow substances that can alter the function of the brain to induce unnatural euphoria, or alter reality, such as marijuana, cocaine, magic mushrooms, herbal ecstasy, etc." according to its policy. It allows ads that refer to smoking accessories like vaporizers only "when promoted as a humidifier or an aromatherapy device."

While the legal weed business is projected to grow 68 percent annually for the next few years and has raised $17.9 million in tax revenue for Colorado in its first four months, there is a growing concern that cannabis-related businesses won't be able to realize their potential without far-reaching online advertising.

Legal weed entrepreneurs can use direct mail and limited forms of print advertising to broaden their audience, but Dietrich says it's not cost-effective. Colorado's new marijuana laws prohibit cannabis shops from placing ads in print publications unless the outlet "has reliable evidence that no more than 30 percent of the publication's readership is reasonably expected to be under the age of 21." Several publishers are suing the state over the rules.

However, many entrepreneurs and analysts are concerned more about the limits on online networks, where the market is migrating.

There's a fear that merchants of ancillary products like smoking accessories will suffer most.

"For a lot of smaller companies, they don't have a lot of channels to reach consumers," said Paris Holley, a co-founder of the Mantis Ad Network, which is trying to appeal to cannabis businesses frozen out of the larger networks.

It's not as much of a problem for dispensaries or places where weed is sold legally, Holley said. "For anything that 'touches the flower,' their market will always find them."

But online ad rules are strict for any product connected to the industry.

"To reach a large-scale audience, these rules are limiting," said Emily Paxhia, a founder of Poseidon Asset Management, a cannabis-oriented hedge fund in San Francisco.

She is one of many Californians closely watching the developments in Colorado. Legalization supporters - including Lt. Gov. Gavin Newsom - are planning to bring a legalization measure to the California ballot in November 2016. According to two statewide polls taken last fall, upward of 60 percent of likely California voters would support a measure to tax and regulate marijuana.

But Alan Brochstein, the founder of 420 Investor, who will be speaking at the Weedstock business conference next week in Colorado, says there are more pressing concerns for the growing industry beyond the online ad stalemate. He expects that online advertising rules will soften in step with federal regulation of the drug.

Latest from the SFGATE homepage:

Click below for the top news from around the Bay Area and beyond. Sign up for our newsletters to be the first to learn about breaking news and more. Go to 'Sign In' and 'Manage Profile' at the top of the page.